SCIO briefing on trade and economic cooperation under B&R Initiative

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Speakers:
Qian Keming, vice minister, Ministry of Commerce
Zhang Xingfu, head of the Department of Outward Investment and Economic Cooperation, Ministry of Commerce

Chairperson:
Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

Date:
May 10, 2017

Chairperson Xi Yanchun:

Ladies and gentlemen, good afternoon. Welcome to the press conference of the State Council Information Office. Today's conference will be about the Belt and Road Initiative.

We are delighted to invite Mr. Qian Keming, vice minister of commerce, to introduce trade and economic cooperation under the Belt and Road Initiative and answer some of your questions. Also present is Mr. Zhang Xingfu, the head of the Department of Outward Investment and Economic Cooperation of the Ministry of Commerce.

Now, let's welcome Mr. Qian to give his briefing.

Qian Keming:

Good afternoon, friends from the media.

In 2013, President Xi Jinping proposed the Belt and Road Initiative to boost global development and cooperation. It demonstrated China's willingness to shoulder its responsibilities as a large and important country.

With the principles of extensive consultation, joint contribution and shared benefits, the Initiative features openness, inclusiveness and win-win cooperation. This fulfills the expectations of countries along the route, with the aim of creating a community of a shared future. So far, the Initiative has received positive responses from more than 100 countries and international organizations.

Unimpeded trade is a major issue under the Belt and Road Initiative. We have made notable achievements in the following five aspects.

Regarding trade, we have actively boosted mutual market openness and increased trade facilitation. Various expositions, including the China-ASEAN Expo, China-South Asia Expo, China-Eurasia Expo and China-Arab States Expo, have played their role in facilitating interaction between businesses along the Belt and Road and helped them enjoy the opportunities created by the Initiative. From 2014 to 2016, trade between China and countries along the routes of the Belt and Road enjoyed a growth rate faster than the global average, reaching 20 trillion yuan in total regarding investment and cooperation, we have continually improved services to encourage more Chinese businesses to invest in countries along the route. Between 2014 and 2016, the total direct investment made by Chinese businesses in those countries surpassed US$50 billion, and the contractual value of new construction projects reached US$304.9 billion. Besides, we have attracted businesses from countries along the Belt and Road to invest in China by offering them wider market access and a comfortable business environment.

Regarding major projects, we have worked with related parties to promote smooth progress in various projects. The China-Laos Railway, the second phase of Pakistan's Karakoram highway and the Karachi-Lahore motorway are under construction. The oil and gas pipelines joining China with Russia, Kazakhstan, Myanmar and other countries are either under construction or already in operation.

Regarding overseas business cooperation zones, Chinese businesses have invested more than US$18.5 billion in 20 countries to build 56 such zones. These have generated about US1.1 billion in tax revenue and created approximately 180,000 jobs for the host countries. The China-Belarus Industrial Park has become a landmark project in the Silk Road Economic Belt. Smooth progress has been made in the building of the Suez Economic and Trade Cooperation Zone in Egypt, the Thai-Chinese Rayong Industrial Zone and Cambodia's Sihanoukville Special Economic Zone, among others. Regarding free trade areas, we have signed free trade agreements with ASEAN collectively, along with Singapore, Pakistan and other international organizations and countries along the route. Agreement was reached last July on upgrading the China-ASEAN free trade zone. A free trade agreement is going to be signed with Georgia. Currently, we are working on negotiations over the Regional Comprehensive Economic Partnership (RCEP) and on negotiations over free trade zones with Israel, the Maldives, Sri Lanka, the Gulf Cooperation Council, among others.

Today, products made in China, projects undertaken by China and services offered by China have become increasingly popular in countries along the Belt and Road. More and more products, services, technologies and investments have flowed into China from those countries. Tangible achievements have been reached in trade and economic cooperation; new energy has been injected into those countries for economic development; new momentum has been provided for the development of an open world economy; innovative modes have been created for economic globalization.

Now, I'd like to answer your questions with my colleague.

Xi Yanchun:

Thank you, Mr. Qian. Now the question session begins. Please identify your media outlets before raising questions.


China Central Television (CCTV):

We have noticed that the Ministry of Commerce is responsible for organizing a parallel session on promoting unimpeded trade during the Belt and Road Forum for International Cooperation. How is the preparatory work progressing? Also, could you please introduce the number and size of the free trade zones between China and countries along the proposed routes as well as the impetus they have given to the regional economy?

Qian Keming:

We all know that China will host the Belt and Road Forum for International Cooperation in Beijing on May 14-15. The forum will be the highest-level international conference to be held in China under the framework of the Belt and Road Initiative, and it has received wide support and positive response from the international community. The conference will consist of three parts — the opening ceremony, high-level meeting and the round-table summit. There will be six parallel themed sessions under the high-level meeting, among which the parallel session on promoting unimpeded trade is prepared and organized by the Ministry of Commerce.

The theme of the parallel session on promoting unimpeded trade is "smooth, efficient, mutual benefits, development and deepening economic and trade cooperation of the Belt and Road." If we can reach a consensus on many issues, we will make an announcement on this at that time.

Currently, all the preparations for the meeting are progressing smoothly. About 200 have confirmed their intention to attend the meeting, among whom about 120 are foreign guests from more than 50 countries. Presently, we are steadily moving ahead with preparations in cooperation with relevant departments and in accordance with the highest standards, most stringent requirements, and most practical measures to ensure the success of this meeting.

Up to now, we have already signed and implemented free trade agreements with 22 countries and regions, including 11 countries along the Belt and Road, namely. the China-ASEAN Free Trade Agreement, China-Pakistan Free Trade Agreement, and China-Singapore Free Trade Agreement. Just now. I mentioned that, during the summit we will sign a formal trade agreement with Georgia, and will start a free trade agreement feasibility study with Mongolia. There is a schedule according to which we will promote the building of free trade zones with 20 countries along the Belt and Road, involving the implementation of the regional comprehensive economic partnership agreement (RCEP), and the China-Gulf Cooperation Council (GCC), China-Maldives, China-Sri Lanka, and China-Israel free trade negotiations. We will carry out a joint free trade feasibility study with Nepal, Bangladesh and Moldova. And, we will start negotiations with Pakistan and Singapore on upgrading the free trade agreements already signed.

Moreover, under the Asia-Pacific Free Trade Agreement, we have concluded the fourth-round of tariff reduction negotiations with India, Sri Lanka, Bangladesh and Laos – four countries situated along the routes. Currently, the outcome of the negotiations is being implemented in an orderly manner.


Phoenix TV:

We've noticed that Chinese companies may face some risks when joining construction projects in countries along the Belt and Road. How will the Ministry of Commerce assess such risks? What specific measures are being taken to guide or help the enterprises? Besides, we've also noticed that a trend in favor of reversing globalization is rising around the world. In particular, we are facing difficulties in cooperation with our principal trade partners. How will the Belt and Road Initiative ensure expanding trade with China, especially in countering any trade barriers from some countries? Thank you.

Zhang Xingfu:

Foreign investment and cooperation are important to the Belt and Road Initiative. The Chinese government is encouraging qualified and capable enterprises to go international in their investment and cooperation activities. Generally speaking, the overall situation is good, according to ministry statistics. However, enterprises inevitably face some difficulties and problems when going international. We know the problems and risks involve political, economic, legal, social and security factors, as well as for business operational reasons. In recent years, we have been enhancing our guides and services for enterprises, by attaching equal importance to development and risk control, to ensure they go ahead in a steadier and better way. We have built a precaution system against risks involving foreign investment and cooperation so as to be able to issue timely risk warnings. We have signed investment agreements with countries related, provided guidance to enterprises on how to reduce and cope with overseas emergencies, and worked hard to safeguard the legal rights and interests of Chinese enterprises as well as foreign nationals. Meanwhile, the enterprises should carry on their business in accordance with the laws and regulations at home and abroad and create feasible international development strategies especially in avoiding blind investment without full investigation.

Qian Keming:

In general, the impact of the global financial crisis that hit the world in 2008 has lasted until now. In the midst of an economic downturn, trade protectionism is rising due to objective reasons, namely that economic globalization may bring about imbalances between the developed and developing countries in regard to their specific interests, within an individual country and among the developed countries themselves. In regard to structural imbalances, different countries take different measures, some turning to trade protectionism. China is committed to open development. In this context, we need a global public product to lead and promote and add fresh momentum to economic globalization, or to offer new political choices. It is in this context that the Belt and Road Initiative has been put forward at exactly the right time. The Initiative will add new impetus to China's future development, especially development of the middle and western regions of the country as well as the opening-up strategy. It will also inject new vitality to the world economy and the development of countries along the Belt and Road in particular and offer a new public product as well.

The Initiative plays a key role in boosting confidence in economic globalization and global economic growth, invigorating the world economy and providing new impetus for the globalization drive. Besides, it is known that the many countries along the Belt and Road, especially those in Central Asia, are landlocked. In a period of rapid development of globalization, they lag behind in economic development and participation in the globalization process. Thus, the previous round of globalization hardly brought any tangible benefits to the region, which is the deficiency we have analyzed in the process of developing our globalization approach, that is, lack of inclusiveness. Moreover, global development is imbalanced. The Belt and Road Initiative exactly covers that particular region and will offer them opportunities for economic integration and development.

Infrastructure construction is an important part in the Belt and Road Initiative. As you know, geographical factors play an important role in creating barrier-free trade and economic integration. The trade in landlocked countries is not smooth. Once the infrastructure is connected, the flow of capital, logistics and information, plus human interaction, will be enhanced. Trade and investment also will be boosted. So, the Belt and Road Initiative is of great significance in breaking down trade protectionism and promoting the development of the regions along the Belt and Road as well as further development of economic globalization.


Reuters:

The Belt and Road Initiative is President Xi Jinping's signature plan. Many think that the plan will continue for decades to come. So I'm wondering what guarantee the rest of the world have that once President Xi's term as president has ended, the overall plan won't be replaced or abandoned by the next leader. Secondly, there is a concern among foreign companies that all these infrastructure, these projects are for Chinese companies, not for other countries' companies. So will they be allowed to bid along with the Chinese companies for these projects? Thank you.

Qian Keming:

The Belt and Road Initiative was proposed by President Xi in 2013; however, it is not an individual proposal or one that somehow fails to be implemented. It has received worldwide responses and belongs to all. We call it an initiative of extensive consultation, joint contribution and shared benefits, because it is advanced by all participants rather than one country, namely, China alone. So your concern is unnecessary. The vitality of the initiative lies in the fact that it meets the expectations for future development of countries along the Belt and Road. It has awakened their desires and pursuit of development. This is why the Initiative is so dynamic, and its vitality has nothing to do with who proposes it or how long his tenure in office might be. It has received such a strong response as it accords with the hopes of the countries along the route.

Secondly, while promoting the Initiative, participants including enterprises and governments have all focused on scientific planning and prudent implementation to protect its sustainability. I believe that further promotion of the Initiative will have an ever-larger impact on the region's economic growth, as well as facilitating policy coordination, facilities connectivity, unimpeded trade, financial integration and strengthened people-to-people ties. It will definitely show even greater vitality.

Zhang Xingfu:

The Belt and Road Initiative is an open and inclusive framework. Chinese companies' investment in and cooperation with countries along the route must strictly conform to the requirements of the host country and abide by international conventions. In project bidding, Chinese companies compete and cooperate with their international counterparts on a level playing field. Investment and cooperative projects conducted by Chinese companies have driven the development of the local economy and society, and created many jobs and tax revenue for the host countries. According to our statistics, overseas Chinese companies achieved a sales volume of US$1.5 trillion in 2016, generating US$40 billion in taxes and creating over 1.5 million new jobs for host countries.

At the same time, many Chinese companies have cooperated with enterprises from a third country to contract for projects along the Belt and Road. For instance, the Hassyan Clean-Coal Power Project in Dubai involves joint investment from the Silk Road Fund, banks in the Middle East and multinational banks, and it is jointly contracted by Chinese companies and General Electric. The trade cooperation zone constructed by Chinese companies in Vietnam has not only attracted Chinese companies, but also enterprises from Japan, South Korea, Singapore, Australia, Malaysia and Vietnam. The Vinh Tan Coal-fired Power Plant (Phase I) Project in Vietnam also involves cooperative investment by China Southern Power Grid, China Power International Development and Vinacomin. These are all examples of our cooperation with other countries. Thanks.

Xi Yanchun:

We noticed that many foreign media have reported on the Belt and Road Initiative, but some of the reports may not be particularly comprehensive and accurate. We will have more press conferences like today to introduce to you the progress of the initiative. On the other hand, we hope that your reports will be more precise and objective. Please continue to ask questions.


People's Daily:

We've noticed that some of the countries along the Belt and Road are small in terms of economic size, and have limited import and export capabilities. How do you see the prospects of China's trade with these countries? What measures will be taken to boost trade with them? Thank you.

Qian Keming:

Thank you for your question. It is indeed a fact that some of the countries along the Belt and Road are relatively underdeveloped, with little trade cooperation among them. What lies behind it is the fact that these countries, small economically, have yet to deeply integrate themselves into economic globalization. This brings about not only problems and challenges, but also enormous potential and opportunities. There is great potential for investment and trade cooperation among them as they are highly complementary in terms of resources. We will introduce multiple measures in this respect, among which achieving infrastructure connectivity is the key. With overall infrastructure connected and standards aligned, trade will surely be boosted.

In addition, we are leveraging the role of joint commissions on commerce and trade and FTZ negotiations in bolstering bilateral trade. Other measures include holding expositions, such as the five or six large-scale national expositions I've already mentioned. I'm convinced that rapid economic growth, infrastructure connectivity and the alignment of standards and development plans will stimulate trade in this region.

Russia Today:

Mr. Qian, you just mentioned some major projects with Russia, Kazakhstan and Belarus. My question is what specific measures will China take or has already taken to achieve synergy between the Belt and Road Initiative and the Eurasian Economic Union?

Zhang Xingfu:

President Xi Jinping proposed jointly building the Silk Road Economic Belt during his visit to Kazakhstan in September, 2013. China and the 12 Eurasian countries are taking the lead in implementing the Belt and Road Initiative, with fruitful achievements. The work we've done and will continue to do can be summed up in six aspects.

First, we take immediate actions to realize extensive alignment of policies. The Ministry of Commerce has signed cooperation agreements on joint contributions with its Eurasian counterparts, advancing the development of the Belt and Road Initiative and Eurasian Economic Union as well as the alignment of economic and social development strategies.

Second, bilateral trade is growing steadily. The trade volume between China and 12 Eurasian countries increased by 20.9% year-on-year in the first quarter of 2017. China remains one of their major trading partners. The trade mix continues to improve, with e-commerce thriving and reciprocal market access being achieved for many agricultural products.

Third, breakthroughs are being made in FTZ development. China is about to sign a free trade agreement with Georgia, making the latter the first Eurasian country to sign an FTA with China. China and Moldova have concluded their feasibility study for FTZ negotiations and will officially start the process in due time. China and the Eurasian Economic Union have agreed to take establishing FTZs as our long-term goal, and have conducted the third round of negotiations on an economic and trade cooperation agreement.

Fourth, bilateral investment prospers. China has made all kinds of investments totaling US$83 billion in Eurasia, improving the well-being of local people.

Fifth, notable progress has been made in capital flows. The Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund, China-Eurasian Economic Cooperation Fund and China-Kazakhstan Capacity Cooperation Fund have been established and currency swapsare being expanded, thus diversifying the platforms for China to invest in the region.

Sixth, the Shanghai Cooperation Organization (SCO) plays an increasingly important role. In recent years, China has taken the SCO as an essential platform to pursue connectivity, industrial-capacity cooperation, capacity building and investment and financing cooperation with countries along the Belt and Road. To advance trade facilitation, it has proposed establishing an SCO e-commence alliance and hosted SCO Countries Commodity Fair in Xi'an in 2015. The SCO prime ministers' meeting ratified a list of measures to further promote cooperative projects within the SCO from 2017 to 2021, and initiated SCO institutional arrangements on trade facilitation. SCO regional economic cooperation has entered a new stage featuring integrated development with the Belt and Road Initiative.


CBN:

I have two questions. Firstly, we know that the Belt and Road Initiative is a major move of China to pursue an all-dimensional opening-up under the new historical circumstances. How is the impact of it on the opening-up of the central and western areas? Moreover, we know that the Ministry of Commerce is in charge of the Department of Foreign Assistance. How to construct the Belt and Road in regard to providing foreign assistance? Will the system of foreign assistance be reformed and improved during this process? Thank you.

Qian Keming:

You are asking about the impact of the Belt and Road Initiative on the opening-up of the central and western areas. After it was announced, we intensified our efforts in opening-up in the central and western areas. You know that we established seven pilot free trade zones, of which five are establish in the central and western areas. At the same time, the two regions are situated along the route taken by China-Europe freight trains. This includes Chongqing, Chengdu, Wuhan, Zhengzhou, Xi'an and Lanzhou. These measures promote the opening-up of the central and western areas. Economic zones in border areas and cross-border economic cooperation areas are also being established to help regional advancement. In general, a new pattern of opening up from eastern areas to western areas has been formed.

Zhang Xingfu:

As for our foreign assistance, I mentioned that the Belt and Road Initiative is open and inclusive. Our foreign assistance is an important manifestation that China is a responsible major country. I believe reform of system of foreign assistance can keep pace with the times and the development of foreign assistance and the promotion of the Belt and Road Initiative complement each other. Thank you.

TV Asahi:

My question is about concrete statistics. According to the document, trade between China and countries along the Belt and Road route has totaled some 20 trillion yuan (US$2.90 trillion), with a growth rate above the average world level. So, what I want to figure out is the number of countries along the Belt and Road route. If there is an exact figure, would you please discuss it?

Qian Keming:

I don't know whether you have noted that Foreign Minister Wang Yi was asked a similar question a few days ago. The Belt and Road Initiative is open and inclusive so we only generally say that there are several directions without specifying which countries are included or excluded. Our overall principle is to extend a welcome to all those who voluntarily seek to join the initiative for joint efforts through consultation to bring benefits to all with no exclusions. The statistics are roughly calculated and I have more than once emphasized that the figures including outbound investment that has surpassed US$50 billion and contracted projects worth a total of US$300 billion are all general without showing exactly which countries are involved.


China Global Television Network:

As we know, building economic and trade cooperation zones is an important part of the Belt and Road Initiative. You've just mentioned that China has cooperated with over 20 countries along the routes to establish a total of 56 economic and trade cooperation zones. Can you tell us more about the construction progress and the highlights and challenges regarding these zones?

Zhang Xingfu:

Just as Minister Qian has mentioned, China has become involved in building 56 economic and trade cooperation zones in over 20 countries along the routes. Following the market operational mode, Chinese enterprises started from their own development needs and took into consideration the resources, market demand and development strategies of the respective countries to promote construction. According to our classification, there are mainly six types of cooperation zones, namely, processing and manufacturing, resource utilization, the agricultural product industry, trade and logistics, scientific and technological research and development, and comprehensive development.

The construction of cooperation zones is now playing a significant role in promoting economic growth, industrial upgrading, industrialization of those countries and enhancing bilateral trade and economic cooperation. I'll explain through some examples. The Suez Economic and Trade Cooperation Zone in Egypt has seen total investment of US$780 million, producing a GDP contribution exceeding US$600 million. During President Xi Jinping's visit in Egypt in 2016, he and Egyptian President Abdel Fattah al Sisi attended the unveiling ceremony of the second phase of the zone, testifying to its ability to develop with greater prosperity.

Then, there is Sihanoukville Special Economic Zone in Cambodia. It has become an important textile production base in the country, contributing over 50 percent to the economy of the Preah Sihanouk area, creating 17,000 job opportunities for local people and providing financial assistance of over US$10 million for Cambodia. In addition, China's Hodo Group, undertaking construction of the zone, has created training plan in Preah Sihanouk.

We have two cooperation parks in Hungary. One is the Borsod Economic and Trade Cooperation Zone, and the other one is a commerce, trade, logistics economic and trade cooperation zone. The former was constructed by Wanhua Chemical Group Co. Ltd following the mode adopted for Chinese economic and technological development zones. It has become a typical case in borrowing Chinese experiences.

Next, we will continue to promote the construction of economic and trade cooperation zones by stepping up planning and guidance, promoting strategy connectivity, enhancing the cooperative mechanism, and giving full play to the advantages of China, the host country and third-party enterprises to benefit more local people. At the same time, we hope that relevant countries can cooperate with the Chinese government to formulate favorable laws and policies for such construction, and create a good business environment.


Xi Yanchun:

The last question goes to a foreign reporter.

CNBC:

How do you see the development of the Belt and Road Initiative after the Belt and Road Forum for International Cooperation (BRF) is held? Will it be an integration of regional trade agreements? Is it going to be developed in this way? And, how often will the BRF be held?

Qian Keming:

Thanks for your question. To us, the Belt and Road Initiative is a great cooperative initiative. It includes five parts: policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonding. So, it is different from free trade zones. Compared with the emphasis of free trade zones on trade and investment, the scope of the Belt and Road Initiative is wider. It not only involves the economy, but also cultural exchanges, and other aspects. The Belt and Road Initiative is not going to become a free trade zone in the future. Free trade zones are surely a significant part of the Belt and Road Initiative, but we cannot say that countries along the route of the Belt and Road will be built up into a great free trade zone.

As for your third question, the frequency of the BRF is up to the needs of development.

Xi Yanchun:

Thank you again, Vice Minister Qian. Thank you, Mr. Zhang, and all our friends from the press. Another two press conferences on the Belt and Road Initiative will be held tomorrow morning and afternoon. And more information about spokesman and the conferences will be released on the "SCIO" APP. That's all for today's press conference.

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